Brazil’s turn to blockchain: Expert Interview
Delve into Brazil’s rapid rise as a blockchain powerhouse in 2023.
Discover the key factors driving this transformation, as well as the challenges along the way, in our in-depth article featuring an interview with Pedro Magalhães, founder of Iora Labs, influential blockchain expert, Web 3.0 educator, and Youtuber.
Crypto enthusiasm and market growth
Brazil ranks among the world’s fastest-growing digital currency markets.
Approximately 16 million Brazilians are cryptocurrency holders, and over 12,000 companies include cryptocurrencies in their portfolios.
Cryptocurrency is now the preferred investment choice for 33% of Brazilian investors, surpassing real estate, stocks, credit cards, and savings accounts.
The legal framework and DREX: an explanation from a Brazilian blockchain developer
Brazil has become one of the first countries in the world to pass a comprehensive law to regulate the cryptocurrency and virtual asset market.
According to the law, the Brazilian Central Bank (BCB) will act as the main regulator of the cryptocurrency market, setting rules and requirements for companies that provide services using virtual assets. In addition, BCB is launching its own digital currency (CBDC) called DREX. It is also referred to as “Digital Brazilian Real”. Citizens of the country will be able to use cryptocurrency as a means of payment.
Crypton Studio talked to Pedro Magalhães, founder of Web3 consulting company Iora Labs, about his opinion on DREX:
“As a blockchain developer and enthusiast, it’s amazing to explore how we can create real tokenomics that integrates an emerging country through the use of tokenized structures.
On the other hand, we need to actively monitor how the Central Bank of Brazil is handling this. It could be to democratize access or merely maintain the banking monopoly in Brazil.
One of the top 10 most valuable companies in Latin America is a Brazilian private bank. They have enough power to monopolize all operations and shut out any other companies. So, we need to be vigilant and raise our voices against this, ensuring the doors remain open for all entrepreneurs”.
Driving factors for digital asset adoption
Several key drivers underpin Brazil’s enthusiastic embrace of digital assets:
1. Thriving crypto exchanges: Brazil boasts a vibrant cryptocurrency exchange market, facilitating the trading of digital assets. This growth signifies rising interest and participation in the crypto market by individuals and businesses alike.
2. Peer-to-Peer trading: P2P cryptocurrency trading has surged in popularity. P2P platforms connect buyers and sellers directly, facilitating decentralized asset exchanges using various cryptocurrencies.
3. Crypto payments: An increasing number of businesses, particularly in the tech and e-commerce sectors, now accept cryptocurrencies as an alternative form of payment. This adoption enables consumers to use digital assets for everyday purchases.
4. Government blockchain initiatives: Brazil’s government is actively exploring blockchain technology’s potential in areas such as land registration, voting systems, and public services. The transparency and security enhancements offered by blockchain are increasingly valued across different sectors.
“Blockchain isn’t just a tool; it’s a catalyst. For emerging economies like Brazil, it means enhanced productivity, soaring investments, and a brighter future for its citizens”, — added Pedro Magalhães.
Challenges and opportunities
Pedro Magalhães discussed some of the challenges and new opportunities that blockchain will bring to transform Brazil.
“The transition from legacy web2 systems to web3 has its challenges. From building smart contracts using the EVM model, to integrating data through Oracles, to the global shortage of skilled professionals. But Drex promises a new dynamic, powered by the Ethereum-backed Hyperledger Besu, making Brazil a leader in modern blockchain adoption,” he said.
Pedro notes that unlike public blockchains, Brazil’s approach is permissioned and private. Only a select few, delegated companies can submit their smart contracts to Drex. Think of it as an exclusive club, where only financial institutions selected by the Brazilian Central Bank get VIP access to become verifiers.
Pedro: “The technical wizards behind Drex work with leading financial institutions, creating a tightly knit blockchain environment. Each institution has its own node, further strengthening the network.”
What about opportunities? Pedro Magalhães describes them as “massive.”
“From creating cutting-edge web3 business models, integrating DeFi and CeFi with the Brazilian fiat currency, bringing NFTs to the real economy, tokenizing real estate solutions, ensuring traceability and anti-corruption measures, to increasing the security of blockchain integrations”.
What’s next?
Brazil’s embrace of blockchain and digital assets promises a future of enhanced innovation and economic growth, solidifying its position as a global leader in this transformative technology. Pedro Magalhães said, “Blockchain and the digital economy are not just reshaping Brazil but setting a precedent for the world”.
